Garment firms get the right fit

>> Market proves tough to corner

“Vinatex’s target business, based in Khanh Hoa province, operates in textile dyeing field but not in export garment production as those in recent acquisition deals,” said a Vinatex representative.

In July 2011, Vinatex’s member Hung Yen Garment Joint Stock Corporation bought out South Korea-backed Gunyong Garment Company based in northern Hung Yen province, then in late September Vinatex acquired Dai Cat Tuong Garment Company based in central Quang Ngai province.

“We hope to wrap up the deal before the year’s end,” said a group executive.

According to Vinatex’s deputy general director Le Tien Truong, local textile and garment sector would strongly engage in producing garments and accessories in the coming period. “As sourcing investment for capital intensive textile dyeing projects is rather difficult as present, taking over established firms with available workforces and output market would be as a smart move,” Truong said.

In fact, from late 2010 Vinatex halted the implementation of capital intensive textile dyeing projects having the return on equity rate below 20 per cent to give priority to less costly garment projects.

Estimates show that at least $14-15 million investment would be needed to bring online a dyeing plant with 10 million metres per year capacity.

Vinatex currently operates a broad network of 120 member and allied firms. Its top players are Viet Tien, Nha Be and Phong Phu garment corporations. The export value of Vinatex’s member units currently accounts for around 20 per cent of the sector’s total.

In the year to October, the textile garment sector reaped $11.7 billion in total export value, surging 29 per cent on year.